Investors rethink new plant priorities

By Claire-Louise Isted

April 29 - The Energy in East Europe (EiEE) Power Plant Tracker -- a collaboration between Platts Editorial and its data management group PowerVision -- is a must-have document for all those interested in new capacity projects.

Russia, for example, in November 2009 published its Energy Strategy 2030, detailing the investments needed by its power, oil and gas sectors for the next two decades.

Some developers, like Czech power producer CEZ, are pulling back operations in certain regions in order to ensure capacity is brought on line in their core markets, while others, like Russian generators, see adapting existing plant to gas from coal as a cost-effective way to develop power plant capacity.

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Platts Energy in East Europe (EiEE) focuses primarily on the region's developing power and gas markets with additional coverage of the coal and oil markets. EiEE provides in-depth project reports, company profiles and reports on policy initiatives and implementation, investment opportunities and renewable developments.

The EiEE half-yearly Power Plant Tracker lists country-by-country major new power generation capacity that is under development or planned to be developed across the region and includes over 1,800 projects.

Into this mix is the need among new member states to meet the EU’s renewable energy targets, towards which Romania and Bulgaria are now pulling, as well as the growing appeal of nuclear, to which Turkey is increasingly attracted.

CEZ cancelled all its activities in Russia and Ukraine at the beginning of 2009, having decided to focus on the regions where it had already been operating, that is, in Central and South East Europe.

In Russia for example, it has thus scrapped plans with TGK-4 from 2007 to form a joint venture for the possible development of up to 900 MW of new gas and coal-fired capacity at the Shchekinskaya TPP.

The global recession meant less important projects were shelved or cancelled in 2009, while the focus of investment programs this year is for the plans that are sufficiently robust and affordable to be revived.

This has fuelled reports that the company intends to suspend plans for expansion into the Balkans and that it will focus primarily on power plant development in the Czech Republic and Slovakia.

Lithuania closed its Ignalina nuclear power plant at the end of 2009 as part of the terms of its accession to the EU.

Visaginas Nuclear Power Plant -- the developer of a proposed new nuclear plant with capacity of up to 3,400 MW -- has signed a contract with a consortium led by N.M. Rothschild & Sons and comprising Evli, the Baltic investment bank, consultant NERA and the engineering consultancy Fichtner to assist with the development of a business plan.

A list of potential strategic investors was to be drawn up by December 2009 with contracts with selected investors to be signed in the second half of 2010, but Lithuania's plans to construct a new NPP in partnership with Estonia and Latvia, as well as Poland, have been delayed as a result of demands by Poland for a bigger, 30% stake in the project and also by Lithuania's problems in setting up a national investment company to own and operate its 34% share of a new nuclear power plant. (See related table: Poland: Power Plant Tracker (April 2010)).

The production of electricity from coal in Poland has declined in the last three years. National grid company PSE Operator attributes this trend to a new energy policy adopted by the EU, as well as to modernization of the Polish energy sector.

Plants used 25 million mt of oil equivalent of hard coal to produce electricity and heat in 2006, although the figure is likely to drop to 20 million mt of oil equivalent this year and to 18.8 million mt in 2015.

There is also expected to be a decline in the use of lignite coal, from 12.5 million mt of oil equivalent in 2006 to some 11 million mt in 2010.

The plan is to build two gas-fired blocks of 432 MW capacity each, with the first block to be commissioned in 2015.

While the decline in the use of coal will be followed by a considerable rise in the use of natural gas to generate electricity and heat in a mixed system, power production from renewables and especially from biomass, biogas and wind farms, is scheduled to rise quickly for the next 10 years.

Poland is witnessing an unprecedented growth of electricity generated by wind farms, which could mean the goal of having a 15% share of total energy coming from green sources by 2020 may be exceeded.

Poland has made progress with its plans to build a pilot carbon capture project. The shareholders of the Belchatow electricity generating plant, the largest coal-powered facility in Europe, plan to seek funding for an estimated €600 million in construction costs.